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3 E-Commerce ETFs For The Online Shopping Boom

April 27, 2020 7:55 am
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3 E-Commerce ETFs For The Online Shopping Boom

Prior to the outbreak of the coronavirus, consumers were already gravitating to online shopping, leaving many brick-and-mortar retailers at risk. The share price performance of Amazon.com (NASDAQ:AMZN) and Shopify (NYSE:SHOP), among others, confirms as much.

The COVID-19 pandemic is speeding along the move to e-commerce as malls and non-essential retailers across the U.S. are temporarily shuttered. The respiratory illness could have long-ranging implications for retailers.

“Additionally, when stores re-open many consumers will be reluctant to visit busy locations due to lingering concerns around their health,” according to GlobalData. “Consumers may switch to third-party pickup options instead, especially lockers, as this fulfilment method has no contact with others, as long as shoppers are reassured about the cleanliness of the facilities.”

The proof is in the pudding, as many dedicated e-commerce exchange traded funds, regardless of Amazon weight, are beating the more traditional SPDR S&P Retail ETF (NYSE:XRT). Here's a look at a trio of interesting e-commerce ETFs.

Amplify Online Retail ETF (IBUY)

The Amplify Online Retail ETF (NASDAQ:IBUY) is the original online retail ETF, having debuted four years ago. IBUY now has $257 million in assets under management, a sum that could grow commensurate with the industry it tracks. The fund tracks the EQM Online Retail Index, which requires member firms to derive at least 70% of sales from online or virtual venues.

IBUY is trading slightly higher this year, which is impressive on multiple fronts. It's beating the S&P 500. It's trouncing the aforementioned XRT. Moreover, IBUY is doing all that with a relatively modest 3.35% allocation to Amazon.

Additionally, IBUY's 2020 showing is notable because the fund allocates 6.5% of its weight to online travel companies, a group that's been savagely punished by the coronavirus crisis.

Global X E-Commerce ETF (EBIZ)

The Global X E-Commerce ETF (NASDAQ:EBIZ) is another notable idea in the e-commerce ETF fray, and it is a departure from the aforementioned IBUY, as it mostly eschews travel fare. What makes EBIZ unique is its broad reach into the e-commerce realm and that it features some solid weights to names not adequately represented in rival ETFs.

For example, Shopify and Wayfair (NYSE:W), two of the highest fliers in online retail, are among the top 10 EBIZ holdings.

Shopify is up more than 85% from a low hit earlier this month, becoming one of the most valuable companies in Canada, while Wayfair has more than quintupled off a March low, having surged more than 400% over the period,” according to Bloomberg.

ProShares Online Retail ETF (ONLN)

Based on pure performance, the ProShares Online Retail ETF (NYSE:ONLN) is one of this year's most impressive industry ETFs, online retail or otherwise, as highlighted by a 14.64% gain.

Of course, it helps when an ETF allocates roughly a quarter of its weight to Amazon, one of the best-performing mega-cap stocks this year. On that note, ONLN makes for a fine proxy on Amazon for capital-starved investors who can't amass sufficient positions in the e-commerce juggernaut.

ONLN, which turns two years old in July, follows the ProShares Online Retail Index.

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